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APSC claims involvement with Southern Power Pool not a conflict of interest
Becky GilletteThursday, September 19, 2013

Two of the three members of the Arkansas Public Service Commission (APSC), Chairman Colette D. Honorable and Olan Reeves, and APSC Executive Director John Bethel are listed as members of the Southern Power Pool (SPP) on the SPP website. Opponents of the proposed American Electric Power (AEP)/Southwestern Electric Power Company (SWEPCO) high voltage power line project feel that could represent a conflict of interest, as the APSC has final say on whether the project will receive a Certificate of Environmental Compatibility of Public Need (CECPN) allowing it to be built.

SPP is a Regional Transmission Organization (RTO) group mandated by the Federal Energy Regulatory Commission (FERC) “to ensure reliable supplies of power, adequate transmission infrastructure, and competitive wholesale prices of electricity.” Members include AEP, SWEPCO, and dozens of other power companies and transmission companies.

AEP/SWEPCO said that SPP gave them a Notice of Construct for the Shipe Road to Kings River 345 kilovolt (kV) transmission line. The line has been strongly opposed in Northwest Arkansas as being unnecessary and potentially devastating to the environment, beauty, tourism and property values.

Luis Contreras, who owns property on one of the proposed routes, said he feels APSC commissioners and Bethel serving on both the APSC and being members of the SPP is a clear conflict of interest. Contreras alleges that APSC often rubber stamps applications.

“In the past ten years, 17 out of 17 applications by AEP/SWEPCO to the APSC have been approved,” he said.

“I didn’t know why my name appeared on the SPP web page,” Bethel said. “But I investigated and learned that anyone who has subscribed to one of their email lists is put in a contact database and their name comes up in a member search. I am not a member of the SPP, nor are any of the three commissioners here.”

Bethel said that Commissioner Reeves serves on the SPP Regional State Committee (RSC), and Chairman Honorable previously served as the APSC representative on the RSC.

“The RSC’s authority within the SPP is specifically limited to only transmission project cost allocations process or methodology, and the resulting financial impact on ratepayers,” Bethel said. “The RSC does not have authority to direct or approve the construction of any SPP proposed transmission project or transmission upgrade. Under the FERC-approved SPP bylaws and SPP tariff (rate schedule), only SPP’s independent board of directors is granted that authority within SPP.”

Each of the nine state regulatory commissions in SPP’s footprint is entitled to one seat on the RSC.

Bethel said the federal commission approved the SPP regional commission and expressly limited its authority to:

Whether and to what extent participant funding would be used for transmission enhancements

Whether license plate (a rate that is the same for a specified region) or postage stamp rates (a rate consistent throughout the SPP footprint) will be used for the regional access charge

How financial transmission rights are allocated among SPP members and customers

The transition mechanisms are to be used to assure that existing firm customers receive FTRs equivalent to the customers’ existing firm rights

According to FERC, like any other market participant, the RSC should provide “direction and input” into the SPP process. However, the federal commission will allow the state commission primary responsibility when it directs an action of the SPP.

Bethel said in Reeves’ role as designated representative on the RSC, he acts on behalf of the commission and is exclusively addressing the SPP transmission project cost allocation methods, and potential rate impact on Arkansas ratepayers, under the assumption that all SPP-proposed transmission projects are eventually constructed.

“The role of the RSC is to ensure that the regional transmission system is constructed at a reasonable cost by the SPP Transmission Owners and that the cost of those facilities which are reflected in retail rates of SPP utilities and borne by Arkansas ratepayers are reasonable,” Bethel said. “The RSC works to ensure that the cost of the transmission projects do not work to the detriment of ratepayers and ensure that rate impacts of such facilities, if ultimately built and placed into service, are within a reasonable range.”

Bethel said neither Commissioner Reeves nor other commissioners are required or committed to approve any transmission project proposed by the SPP to be constructed in Arkansas by an SPP member electric public utility.

Bethel said Reeves doesn’t receive compensation for serving on the RSC, and Bethel does not perceive that Reeves’ participation in the RSC is a conflict of interest in the AEP/SWEPCO proceeding.

Martha Peine, a power line opponent who raised questions about a perceived APSC bias towards AEP/SWEPCO, said ostensibly APSC having a representative on the RSC should be to the state’s benefit.

“SPP is a stakeholder organization and makes decisions by consensus,” Peine said. “If our commissioners were not members and were not participating, then SPP would get away with all kinds of stuff even worse than what they’re doing now. So it is a good thing they are members.”

However, she said in some other Regional Transmission Organizations, RSCs are companion organizations instead of being part of the RTO. “That gives more of an arm’s length,” she said.

Peine sees another sort of conflict of interest, as public service commissions get operating funds from a tax on the revenue of the utility companies. Hence, the more public service commissions approve in spending for the utilities, the higher the budget for the public service commission.

“If my operating budget is based on your profit, I want you to have higher profit,” Peine said. “RTOs are the same way. They are funded on the amount of profits their member utilities make. The more profit, the better. I can’t see it any other way.”